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Discussion in 'Landscape Architecture and Design' started by mcdow, Nov 26, 2011.
While you're here, can you check out my squeeky bed?
It happens. Sometimes you have to give back. I know they are taking advantage of us but, at the end of the day to me it doesn't bother me.
Happens more than you think.
Sure. We all get stuff like that. But now'adays we get paid for it. Like you, I got tired of people asking for extras and then not expecting to be paid for it. So I changed my ways. Now, long before our crews ever show up to do any work, while I am just signing the contract with the customer, I point out section 14 of our contract which states:
14.ADDITIONAL WORK: Any additional requests / work requested outside of the scope of the project(s) outlined on page 1 will be done at the rate of $55 per man hour plus exact cost of expenses / materials and to be agreed upon before by both parties.
And this actually accomplishes two things. First, it makes the client think that our labor rate is $55 per man hour, which isn't true. Our standard labor rate for landscape construction is $70 per man hour. But they don't know that, because I've provided a flat price bid for labor, not an hourly one. And the second thing this accomplishes is that it tells them from the get-go that we're going to be charging for any extra requests. This alone usually STOPS the extra requests before the customer even asks.
But, the nice benefit to this is when you get a customer who still has money to spend while you're doing the job - a lot of times they will say to me, "Hey Jim. Do you guys repair fences? Can you rebuild this gate over here for me while you're here this week? I understand the extra cost. No problem there. But I figured if that's something you did I might as well just have you fix that while you're here." And I say, "Sure. We can do that. It will be $55 per hour like we talked about when we went over the contract. And I'm guessing it will be about 4 hours, give or take." And they'll say, "No problem. Go ahead and do that, please. Just let me know how much more I owe you when you're done."
So it's kind of sweet. It allows people who DO have some extra money the liberty to know that they can ask for all the extras they want, as long as they're willing to pay us for it. And sometimes we'll get an extra $1000 or $2000 out of a customer with the add-ons they ask for. And the best thing is they are happy to pay the extra amount - because they expected us to charge them for it from the beginning!
Now, for those of you who are asking yourselves why $55.00, if you normally make $70 per hour? Well, there's a complicated answer to that. But real briefly; 1) $70 is what I can get away with because of where our company stands in our market. But we can still make money at a lower rate. 2) our $70 rate is based on estimated labor. So we bid a little high just in case the job takes longer than expected. With this $55 rate, it's time and materials. No guessing needed. Lower risk means I can do it for a lower price. 3) We're already totally mobilized and on-site. In this case, the incremental cost of spending a few more hours on site is a whole lot less. And our basic overhead has already been recovered by the crew just being busy for that entire week. So anything above our labor burden is really just bonus $$. There is more that goes into it. But $55 is a good rate for us for add'l work. And it makes us seem like our prices are really pretty fair.
Anyway, doing this will totally solve your problem of the "extras."
I'll still throw in freebies here and there once in a while without charging people. I don't nickle and dime people to death for silly requests that only took us a total of 1 hour more in an entire week. I'm not going to do that to someone who is paying me $10K or more. I'll give a little before we start charging. But the expectation is laid out at the beginning. And this just makes everything go so much more smoothly.
By the way, here's another tip I don't let out of the bag very often....
At the end of every big job, I'll write up the final invoice. It will start with the balance that was due on the contract. Then I'll list out any additions. Then, I'll often list out several things we did for free. People absolutely LOVE this. And I point it out to them when I go over the contract. I'll say, "So here's you're balance from the contract. And here are the extra items you requested. And then there are a few other things that I just threw in and didn't charge you for. Like......" I always get a "Wow! Well, thank you very much!" People eat it up and then go away feeling like you're the nicest guy in the world. The reality is those things I threw in really wouldn't have amounted to much extra anyway. So I'm willing to trade the money I could have gotten by charging them for these things for some good will.
A typical final invoice will look like this:
Remaining balance due on contract #11-205 $8,250.00
Fence repair as requested. 5 hrs. $275.00
Materials used in fence repair $28.00
Add'l Irrigation work requested. 6 hrs. $330.00
Irrigation materials. (list) $110.00
(2) 8' Hinoki Cypress Trees as requested $500.00
Planting compost, fertilizer for trees $20.00
Labor to install 6 man hours $330.00
Transplant 2 Rhodies, 1 Nandina as requested -- No Charge --
Remove old drip system under deck -- No Charge --
Haul away 7 old plastic pots. Disposal -- No Charge --
(1) 5 gal. Spiraea 'Gold Mound', plant soil, etc. -- No Charge --
Total Balance Due: $9843.00
I may have left $100-$200 on the table by not charging them for those minor items at the end. But on a $16,000 contract with extras, I can afford to do that. Plus, the good will it buys me with them is worth it. Referral!!!
That is good advice Jim! Toss in a freebee now and then, or do a request for free and it can make a big impression on customers.